U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A-1
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13, OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 30, 1997
ITI Technologies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 0-24900 06-1340453
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2266 NORTH SECOND STREET
NORTH ST. PAUL, MN 55109
(Address of principal executive offices, including Zip Code)
(612) 777-2690
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Item 5. Other Information
This Amendment No. 1 to Current Report on Form 8-K (including,
without limitation, the Current Report on Form 8-K being amended hereby
which was filed on May 15, 1997, the information incorporated herein by
reference, and the financial statements and pro forma financial
information included herein) may contain forward-looking statements
that involve risks and uncertainties. Actual results may differ from
the results discussed in the forward-looking statements due to many
factors including, without limitation, risks associated with
acquisitions, such as difficulties in assimilating operations, systems
and products of the acquired company; the diversion of management's
operations, systems and products of the acquired company; the diversion
of management's attention from other business concerns; and the risks
of entering new markets.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
The statements of operations, cash flows and stockholders'
equity of CADDX Controls, Inc. and Subsidiary ("CADDX"), formerly known
as CADDX-CADDI Controls, Inc., for the year ended April 30, 1997, the
CADDX balance sheet as of April 30, 1997, and the report of Coopers &
Lybrand L.L.P., independent accountants, thereon, together with the
notes thereto, are located at pages 3 through 14 of the Amendment No. 1
to Current Report on Form 8-K.
(b) Pro forma financial information.
The unaudited pro forma combined balance sheet as of December
31, 1996, and the unaudited pro forma combined statements of operations
for the year ended December 31, 1996, and for the three months ended
March 31, 1997, and the notes thereto are located at pages 15 through
21 of the Amendment No. 1 to Current Report on Form 8-K.
(c) Exhibits.
The following exhibit is hereby filed by reference to Exhibit
2 to the Current Report on Form 8-K filed by ITI Technologies, Inc.
(the "Company") with the Securities and Exchange Commission on May 15,
1997:
Exhibit 2. Stock Purchase and Sale Agreement dated April 4,
1997, by and among Kenneth T. Lewis, Joe Hurst,
James E. Stevens, Kenneth Ryan Lewis, CADDX and
the Company.
Exhibit 23. Consent of Coopers & Lybrand L.L.P.
CADDX CONTROLS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Page
<S> <C>
Report of Independent Accountants 4
Consolidated Statement of Operations for the Year Ended April 30, 1997 5
Consolidated Balance Sheet as of April 30, 1997 6
Consolidated Statement of Cash Flows for the Year Ended April 30, 1997 7
Consolidated Statement of Stockholders' Equity for the Year Ended April 30, 1997 8
Notes to Financial Statements 9
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of CADDX Controls, Inc.
We have audited the accompanying consolidated balance sheet of CADDX Controls,
Inc. and Subsidiary as of April 30, 1997, and the related consolidated
statements of operations, cash flows and stockholders' equity and for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CADDX Controls,
Inc. and Subsidiary as of April 30, 1997, and the consolidated results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
July 9, 1997
CADDX CONTROLS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1997
Net sales ................................ $ 18,189,687
Cost of goods sold ....................... 10,216,635
------------
Gross profit ............................. 7,973,052
Operating expenses:
Marketing, general and administrative 3,992,965
Research and development ............ 998,837
------------
Operating income ......................... 2,981,250
Other income (expense):
Interest expense .................... (85,693)
Other, net .......................... 12,245
------------
Income before income tax expense ......... 2,907,802
Income tax expense ....................... 900,000
------------
Net income ............................... $ 2,007,802
============
The accompanying notes are an integral part of the consolidated financial
statements.
CADDX CONTROLS, INC.
CONSOLIDATED BALANCE SHEET
APRIL 30, 1997
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 423,922
Accounts receivable ............................. 2,277,001
Inventories ..................................... 2,606,143
Deferred income taxes ........................... 140,847
-----------
Total current assets ........................ 5,447,913
Property, equipment and improvements .................. 677,632
Deferred income taxes ................................. 22,990
-----------
Total assets ................................ $ 6,148,535
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 756,767
Current portion of note payable ................. 19,098
Accrued wages ................................... 195,323
Income taxes payable ............................ 433,664
Other accrued expenses .......................... 129,200
-----------
Total current liabilities ................... 1,534,052
Note payable, less current portion .................... 48,519
-----------
Total liabilities ........................... 1,582,571
-----------
Commitments
Stockholders' equity:
Common stock ($1.00 par value; authorized 10,000
shares; issued 1,833 shares; outstanding
783 shares) ..................................... 1,833
Additional paid-in capital ...................... 483,377
Retained earnings ............................... 5,480,629
Treasury stock, at cost (1,050 shares) .......... (1,399,875)
-----------
Total stockholders' equity .................. 4,565,964
-----------
Total liabilities and stockholders' equity .. $ 6,148,535
===========
The accompanying notes are an integral part of the consolidated financial
statements.
CADDX CONTROLS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED APRIL 30, 1997
OPERATING ACTIVITIES:
Net income ...................................... $ 2,007,802
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............. 288,985
Deferred income taxes ...................... 233,536
Provision for bad debt expense ............. 20,000
Loss on sale of equipment .................. 10,523
Changes in operating assets and liabilities:
Accounts receivable .................... (350,266)
Inventories ............................ (525,892)
Other current assets ................... 10,208
Accounts payable ....................... 112,324
Accrued wages .......................... (806,732)
Income taxes payable ................... 46,263
Other accrued expenses ................. 17,478
-----------
Net cash provided by operating activities ....... 1,064,229
-----------
INVESTING ACTIVITIES:
Additions to property, equipment
and improvements ........................... (290,485)
Proceeds from sale of equipment ................. 10,625
-----------
Net cash used in investing activities ........... (279,860)
-----------
FINANCING ACTIVITIES:
Principal payments on notes to officers ......... (663,000)
Principal payments on notes payable ............. (216,605)
-----------
Net cash used in financing activities ........... (879,605)
-----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS ....................... (95,236)
CASH AND CASH EQUIVALENTS
AT APRIL 30, 1996 .......................... 519,158
-----------
CASH AND CASH EQUIVALENTS
AT APRIL 30, 1997 .......................... $ 423,922
===========
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
<CAPTION>
CADDX CONTROLS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED APRIL 30, 1997
Common Stock Additional Treasury Stock Total
------------------------ Paid-in Retained --------------------- Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
--------- ---------- -------- ---------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
April 30, 1996... 1,833 $ 1,833 $483,377 $3,472,827 1,050 $(1,399,875) $2,558,162
Net income............ 2,007,802 2,007,802
--------- ---------- -------- ---------- ----- ----------- ----------
Balance at
April 30, 1997... 1,833 $ 1,833 $483,377 $5,480,629 1,050 $(1,399,875) $4,565,964
========= ========== ======== ========== ===== =========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
CADDX CONTROLS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
DESCRIPTION OF BUSINESS
CADDX Controls, Inc. and its wholly-owned subsidiary (the "Company"),
formally known as Caddx-Caddi Controls, Inc., is engaged in the
business of designing and manufacturing hardwired security systems. The
Company's customers are generally distributors located throughout the
United States and internationally, primarily in Australia, Europe and
Africa.
On April 30, 1997, 100% of the Company's common stock was purchased by
ITI Technologies, Inc. ("ITI") for $19,000,000 in cash (the
"Acquisition"). ITI and its wholly-owned subsidiaries design,
manufacture and market supervised wireless security systems and access
control systems. The accompanying consolidated financial statements are
presented on a historical basis and have not been adjusted as a result
of the Acquisition.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. All significant intercompany
accounts and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS
Cash equivalents include short-term investments with original
maturities of three months or less. The Company's cash and cash
equivalents are concentrated primarily in one financial institution
located in Texas.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost
computed on a basis which approximates the first-in, first-out (FIFO)
method.
PROPERTY, EQUIPMENT AND IMPROVEMENTS
Property, equipment and improvements are stated at cost. Expenditures
for renewals and betterments are capitalized while expenditures for
repairs and maintenance are charged to expense as incurred. For
financial reporting purposes, depreciation and amortization are
primarily computed using accelerated methods over the following
estimated useful lives:
Years
-----
Building and improvements 5-40
Manufacturing equipment and molds 5-7
Office equipment and other 5-7
The cost and related accumulated depreciation of assets sold or
otherwise disposed of are removed from the accounts and any gain or
loss is included in operations.
REVENUE RECOGNITION
Sales are recognized at the date of product shipment. Warranty costs
are provided for at the time of the related sales.
INCOME TAXES
Deferred income taxes result from temporary differences between
financial reporting and income tax reporting based on enacted rates in
effect for the periods in which these differences are expected to
reverse. Income tax expense is the tax payable for the period plus the
change during the period in deferred tax assets and liabilities.
NOTE 3. OTHER FINANCIAL STATEMENT DATA
Balance as of
April 30, 1997
--------------
Accounts receivable:
Accounts receivable ..................... $ 2,312,001
Allowance for doubtful accounts ......... (35,000)
-----------
Total ............................... $ 2,277,001
===========
Inventories:
Raw materials ........................... $ 1,418,153
Allowance for obsolescence .............. (140,000)
-----------
1,278,153
Work-in-progress ........................ 759,321
Finished goods .......................... 568,669
-----------
Total ............................... $ 2,606,143
===========
Property, equipment and improvements:
Land .................................... $ 19,000
Building and improvements ............... 333,949
Manufacturing equipment and molds ....... 1,326,048
Office equipment and other .............. 376,366
-----------
2,055,363
Accumulated depreciation and amortization (1,377,731)
-----------
Total ............................... $ 677,632
===========
SIGNIFICANT CUSTOMERS AND EXPORT SALES
For the year ended April 30, 1997, two customers accounted for 27.9%
and 13.2%, respectively, of consolidated net sales and accounted for
18.3% and 14.4%, respectively, of consolidated accounts receivable.
Export sales, primarily to Australia, South Africa and Belgium,
accounted for 39.3% of consolidated net sales for the year ended April
30, 1997.
NOTE 4. INCOME TAXES
Income tax expense consisted of the following for the year ended April
30, 1997:
Current:
Federal $651,464
State 15,000
-----------
666,464
Deferred 233,536
-----------
$900,000
===========
The Company paid taxes of $616,806 for the year ended April 30, 1997.
The differences between the income tax expense and income taxes
computed applying the statutory federal income tax rate were as follows
for the year ended April 30, 1997:
Amount using the statutory federal tax rate $988,700
Utilization of a foreign sales corporation exemption (128,000)
Other, net 39,300
-----------
$900,000
===========
A summary of the components of deferred tax assets as of April 30,
1997, are as follows:
Deferred tax asset, current:
Inventory obsolescence reserve $47,600
Vacation accrual 22,100
Other accrued expenses and valuation reserves
not yet deductible for tax purposes 71,147
----------
$140,847
==========
Deferred tax asset, non-current:
Non-compete agreement and related original issue
discount $22,990
==========
NOTE 5. BANK LINE OF CREDIT
Through April 30, 1997, the Company had a revolving line of credit
which provided for maximum borrowings of $2,000,000. This line was
cancelled on April 30, 1997. Interest was payable at 0.5% over the
published prime rate. The note was payable on demand and collateralized
by inventory and accounts receivable. There were no borrowings against
the credit line during the year ended April 30, 1997.
NOTE 6. LONG-TERM DEBT
Long-term debt outstanding at April 30, 1997, consists of a July 18,
1990 note payable to a former owner and director of the Company in
connection with a non-compete agreement. The note calls for monthly
installments of $2,083 through June 2000. The note is non-interest
bearing and has been discounted at a rate of 10%.
Face value of note $79,167
Less original issue discount (11,550)
----------
Amount outstanding as of April 30, 1997 67,617
Less current maturities (19,098)
----------
$48,519
==========
During the year ended April 30, 1997, the Company paid in full three
demand notes totaling $663,000 due to officers of the Company. These
notes bore interest of 9.5% and were unsecured.
In addition, during the year ended April 30, 1997, the Company paid in
full, two notes payable to a bank relating to equipment acquisitions.
The notes, with outstanding principal amounts of $31,488 and $167,830,
bore interest at prime (9.25%) plus 0.5% and prime, respectively. Both
notes were collateralized by equipment.
NOTE 7. COMMITMENTS
The Company rented space under an operating lease with a majority owner
and director of the Company which was cancelled on April 30, 1997. Rent
expense under all operating leases was $84,000 for the year ended April
30, 1997.
Subsequent to the Acquisition, the Company through ITI, purchased the
building housing its principal operations from its former majority
owner and director for $530,000.
NOTE 8. 401(k) PLAN
The Company has a 401(k) Plan under Section 401(k) of the Internal
Revenue Code for all eligible employees. The Company matches 25% of an
employee's contribution up to a maximum of 1% of the employee's annual
wage. In addition, the Company may make discretionary contributions to
the Plan after approval from the Board of Directors. The Company's
contribution for the year ended April 30, 1997, was approximately
$29,000.
ITI TECHNOLOGIES, INC. AND CADDX CONTROLS, INC.
PRO FORMA FINANCIAL INFORMATION - NARRATIVE OVERVIEW
(UNAUDITED)
The following unaudited pro forma combined balance sheet as of March 31, 1997,
and statements of operations for the year ended December 31, 1996, and the three
months ended March 31, 1997, combine the historical balance sheet and statement
of operations of ITI Technologies, Inc. ("ITI"), the historical consolidated
balance sheet and statement of operations of CADDX Controls, Inc. ("CADDX")
(collectively "the Entities"). The unaudited pro forma balance sheet as of March
31, 1997, assumes the Entities were combined as of March 31, 1997. The unaudited
pro forma statements of operations for the year ended December 31, 1996, and the
three months ended March 31, 1997, assume the Entities were combined effective
January 1, 1996.
The unaudited pro forma combined financial statements give effect to (i) the
acquisition of CADDX, (ii) the payment of $19 million in cash in connection with
the acquisition of CADDX, and (iii) other adjustments described in the
accompanying notes.
The unaudited pro forma combined financial statements are not necessarily
indicative of the financial position or results of operations of ITI as they may
be in the future or as they might have been for the periods presented had the
Entities actually been combined effective January 1, 1996, or as of the date of
the unaudited pro forma balance sheet. The unaudited pro forma combined
financial statements and accompanying notes should be read in conjunction with
the historical financial statements of ITI, as filed on Form 10-K for the year
ended December 31, 1996, and the historical financial statements of CADDX,
including the notes to such financial statements, for the year ended April 30,
1997, as set forth in this Form 8-K/A-1. The pro forma adjustments are based
upon information available at this time and upon certain assumptions that ITI
management believes are reasonable in the circumstances.
At the time of the acquisition, CADDX had under development technology related
to the NX-8 security system. It is not currently clear whether any of this
technology will be commercially acceptable or whether it will function
correctly. The development of the NX-8 requires several design and engineering
innovations, including the creation of special telecom and power interfaces that
would be acceptable under any country's regulations anywhere in the world, the
development of software to drive these interfaces and a buss structure to allow
high speed transmissions over long lines without loss of signal, all within the
specified physical space and cost structure contemplated. It is not certain that
these design innovations can be accomplished, and failure to achieve any one of
these innovations will cause the NX-8 project to fail. As a result, in May 1997,
the Company made a $5.2 million non-recurring charge to operations for the value
assigned to the NX-8 technology in process at the time of the acquisition. Also,
subsequent to the acquisition, the Company anticipates that it will include in
cost of goods sold in 1997, a $725,000 purchase accounting adjustment which
resulted from the sale of inventory which had been written up to reflect
estimated selling price less the sum of estimated costs of completion and sale
at the time of the acquisition. The unaudited pro forma combined statements of
operations do not give effect to either of these events.
<TABLE>
<CAPTION>
ITI TECHNOLOGIES, INC.
PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1997
(IN THOUSANDS)
(UNAUDITED)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ITI(1) CADDX(2) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$ (648)(3)
Cash .......................................... $19,476 $ 1,072 (19,530)(4) $ 370
Accounts receivable ........................... 12,866 2,071 14,937
Inventories ................................... 17,226 2,606 725 (5) 20,557
Deferred income taxes ......................... 1,384 178 (200)(5) 1,362
Other current assets .......................... 1,890 1,890
------- ------- -------- --------
Total current assets ..................... 52,842 5,927 (19,653) 39,116
Property and Equipment ........................ 7,755 678 1,030 (5) 9,463
Deferred income taxes ......................... 23 (23)(5)
Excess of cost over net assets acquired ....... 23,233 5,898 (6) 29,131
Other intangible assets ....................... 10,831 5,000 (5) 15,831
Notes receivable, net of current portion ...... 834 834
------- ------- -------- --------
Total assets ............................. $95,495 $ 6,628 $ (7,748) $ 94,375
======= ======= ======== ========
Accounts payable .............................. $ 4,068 $ 757 $ 4,825
Notes payable ................................. 667 $ (648)(3) 19
Other accrued expenses ........................ 3,146 758 185 (5) 4,089
Income taxes payable .......................... 2,194 2,194
------- ------- -------- --------
Total current liabilities ................ 9,408 2,182 (463) 11,127
Income taxes .................................. 4,412 2,312 (5) 6,724
Note payable - long term ...................... 49 49
------- ------- -------- --------
Total liabilities ........................ 13,820 2,231 1,849 17,900
Stockholders' equity .......................... 81,675 4,397 (4,397)(7) 76,475
(5,200)(5)
------- ------- -------- --------
Total liabilities and stockholders' equity $95,495 $ 6,628 $ (7,748) $ 94,375
======= ======= ======== ========
See accompanying notes to pro forma combined balance sheet.
</TABLE>
ITI TECHNOLOGIES, INC.
NOTES TO PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED)
1) Represents the historical balance sheet of ITI Technologies, Inc. as
derived from the Company's unaudited balance sheet filed on Form 10-Q
as of March 31, 1997.
2) Represents the historical unaudited balance sheet of CADDX as of March
31, 1997.
3) Represents the payment of $648 thousand of notes due to officers of
CADDX at closing.
4) Represents the $19 million cash consideration paid for the purchase of
CADDX common stock and the $530 thousand paid for the purchase of the
CADDX manufacturing plant.
5) Represents the allocation of the stock purchase price of $19 million
and $100 thousand of estimated transaction costs to identifiable assets
and liabilities and the $530 thousand paid for the manufacturing
facility, based on the fair value preliminarily estimated for each. The
preliminary purchase accounting adjustments include write-ups of $725
thousand to inventory and $500 thousand to fixed assets other than the
CADDX manufacturing plant; $3.75 million to trade names; $1.25 million
to CADDX customer lists, principally related to CADDX customers outside
the United States; and $5.2 million to the NX-8 technology in process
immediately written off at the acquisition date. Deferred income taxes
have also been adjusted to reflect book-tax basis differences resulting
from the write-ups of inventory and fixed assets and the trade names
and customer list. Depreciation and amortization periods will be
consistent with ITI's existing policies. The customer list will be
amortized over 15 years.
6) Represents the excess of ITI's purchase price over net identifiable
assets acquired.
7) To eliminate the stockholders' equity of CADDX.
<TABLE>
<CAPTION>
ITI TECHNOLOGIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
(UNAUDITED)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ITI(1) CADDX (2) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales .................................. $ 93,331 $ 18,217 $111,548
Cost of goods sold ......................... 48,217 10,233 $ 67(3) 58,517
-------- -------- --------- --------
Gross profit ............................... 45,114 7,984 (67) 53,031
Operating expenses:
Marketing, general and administrative.. 15,005 3,994 (720)(4) 18,279
Research and development .............. 6,270 999 7,269
Amortization of intangible assets ..... 912 -- 368 (5) 1,280
-------- -------- --------- --------
Operating income ........................... 22,927 2,991 285 26,203
Other income (expense):
Interest, net ......................... 815 (56) (1,173)(6) (414)
Other, net ............................ 5 (17) (12)
-------- -------- --------- --------
Income before income tax expense ........... 23,747 2,918 (888) 25,777
Income tax expense ......................... 8,655 904 (286)(7) 9,273
-------- -------- --------- --------
Net income ................................. $ 15,092 $ 2,014 $ (602) $ 16,504
======== ======== ========= ========
Per share amount-primary and fully diluted.. $ 1.60 $ 1.75
======== ========
Weighted average shares outstanding ........ 9,439 9,439
======== ========
See accompanying notes to pro forma combined statement of operations.
</TABLE>
ITI TECHNOLOGIES, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
1) Represents the historical results of operations of ITI Technologies,
Inc. as derived from the Company's statement of operations filed on
Form 10-K for the year ended December 31, 1996.
2) Represents the historical unaudited statement of operations of CADDX
for the year ended December 31, 1996.
3) Represents additional depreciation of the write-up of fixed assets and
the purchase of the CADDX manufacturing plant.
4) Represents the reduction of compensation expense for non-active
majority shareholder.
5) Represents additional amortization of intangible assets (customer list,
trade names and the excess of cost over net identifiable assets
acquired).
6) Represents the reduction of interest income and additional interest
expense due to the cash purchase of $19.63 million, including
manufacturing plant and transaction costs.
7) Represents the tax impact of the above adjustments (note that the
amortization of the excess of cost over net identifiable assets
acquired is not deductible).
<TABLE>
<CAPTION>
ITI TECHNOLOGIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS)
(UNAUDITED)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ITI(1) CADDX(2) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales .................................. $ 23,740 $ 4,643 $ 28,383
Cost of goods sold ......................... 12,216 2,607 $ 17 (3) 14,840
-------- ------- -------- --------
Gross profit ............................... 11,524 2,036 (17) 13,543
Operating expenses:
Marketing, general and administrative.. 3,942 1,001 (180)(4) 4,763
Research and development .............. 1,648 250 1,898
Amortization of intangible assets ..... 228 92 (5) 320
-------- ------- -------- --------
Operating income ........................... 5,706 785 71 6,562
Other income (expense):
Interest, net ......................... 264 (14) (302)(6) (52)
Other, net ............................ (19) (5) (24)
-------- ------- -------- --------
Income before income tax expense ........... 5,951 766 (231) 6,486
Income tax expense ......................... 2,207 237 (75)(7) 2,369
-------- ------- -------- --------
Net income ................................. $ 3,744 $ 529 $ (156) $ 4,117
======== ======= ======== ========
Per share amount-primary and fully diluted.. $ 0.43 $ 0.48
======== ========
Weighted average shares outstanding ........ 8,662 8,662
======== ========
See accompanying notes to pro forma combined statement of operations.
</TABLE>
ITI TECHNOLOGIES, INC.
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
1) Represents the historical results of operations of ITI Technologies,
Inc. as derived from the Company's unaudited statement of operations
filed on Form 10-Q for the three months ended March 31, 1997.
2) Represents the historical unaudited statement of operations of CADDX
for the three months ended March 31, 1997.
3) Represents additional depreciation of the write-up of fixed assets and
the purchase of the CADDX manufacturing plant.
4) Represents the reduction of compensation expense for non-active
majority shareholder.
5) Represents additional amortization of intangible assets (customer list,
trade names and the excess of cost over net identifiable assets
acquired).
6) Represents the reduction of interest income and additional interest
expense due to the cash purchase of $19.63 million, including
manufacturing plant and transaction costs.
7) Represents the tax impact of the above adjustments (note that the
amortization of the excess of cost over net identifiable assets
acquired is not deductible).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 14, 1997 ITI Technologies, Inc.
By /s/ Charles A. Durant
---------------------
Charles A. Durant
Secretary
Exhibit 23. Consent of Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements on Form S-8 of ITI Technologies, Inc. (Registrations No. 33-89826,
No. 333-08943, No. 333-08945 and 333-23751) of our report dated July 9, 1997, on
our audit of the consolidated financial statements of CADDX Controls, Inc. as of
April 30, 1997, and for the year then ended, which report is included in this
Amendment to Current Report on Form 8-K/A-1.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
July 14, 1997
